Mining losing its lustre

20:38, Sep 06 2012

Steven Joyce, promoted to No 4 in Cabinet after the 2011 election, was given the challenge of reshaping the public's sceptical view of mining.

This was crucial, he said, because the sector was a key to creating jobs. He hoped to create an understanding that every time a project is stopped by environmental objectors, job opportunities are lost.

Mr Joyce accordingly was scornful when Green Party co-leader Russel Norman asked him why the Government was fixated on risky deep-sea drilling as a jobs creation scheme (mining employs 6000 people) while it neglects the manufacturing sector (which employs 247,000 New Zealanders but has lost 25,000 jobs in recent years).

But mining has lost some of its lustre in recent times. Solid Energy chief executive Don Elder says a slump in the global coal market prompted a revisiting of substantial investments in underground mining operations at Spring Creek, near Greymouth, and Huntly East. Spring Creek is likely to close indefinitely. Huntly East is set to lose 123 staff this month, and more jobs are under threat, after New Zealand Steel turned to cheaper Indonesian suppliers.

The owners of the Tiwai Point Aluminium Smelter, similarly, are cutting costs and lopping jobs. They say their industry is facing “unprecedented external challenges” and low international metal prices are exacerbated by a strong New Zealand dollar.

Australian mining mogul Gina Rinehart this week gave the greenies further cause to question the strength of the economic fillip we can expect from mining and resource-based industries. She blamed the Australian Government's mining and carbon taxes, along with red tape and labour costs, for that country's sluggish economic performance. Australians were becoming too expensive to employ, she warned. Businesses forced to look elsewhere could hire workers for $2 a day in Africa.

One of our Government's aims is to lift New Zealand wages to Australian levels over the next decade. Ms Rinehart's advice, however, is to keep wages down to be competitive in the mining business. Messrs Key and Joyce must explain how they intend untangling the implicit policy contradiction.